A New Keynesian Workbook
23 Pages Posted: 6 Feb 2007 Last revised: 15 Feb 2009
Date Written: January 30, 2009
A large literature has recently developed to place the New Keynesian framework for analyzing business cycle fluctuations and the conduct of monetary policy into undergraduate economics curricula. New Keynesian models offer several attractive modeling aspects: straightforward linear specifications or structural relations, intuitive and clear dynamic properties, derivation from microfoundations. This paper provides a description of an Excel-based application that presents several versions of the New Keynesian model: static, with adaptive expectations, and with rational expectations. The latter two versions also provide dynamic descriptions of variables' evolution in terms of impulse response functions.
Keywords: New Keynesian model, impulse response functions, inflationary expectations
JEL Classification: A22, E52, E58
Suggested Citation: Suggested Citation